"The assets required to produce software are human brains and the capital to support those human brains while they work," Warden derisively told the court. "Netscape, the object of protection in this case, had what the government calls a monopoly for Web-browsing software until the great Satan, Microsoft, came along."

"The undisputed victory in the so-called browser war has been the consuming public," which had been "gouged" by Netscape before Microsoft was able to force the retail price of a browser to zero, he said.

Netscape CEO James Barksdale took the stand Tuesday afternoon as the first government witness. The case before U.S. District Judge Thomas Penfield Jackson is expected to take six weeks.

In his opening remarks, Warden said Microsoft was a tough but fair competitor. "The antitrust laws are not a code of civility," he said. Warden suggested that antitrust laws are difficult if not impossible to apply to rapidly changing software products.

"The government cannot draw a line around operating systems for Intel-based PCs and call that a market for antitrust purposes," he said. Consumers are never "locked in" to inferior products, even browsers or operating systems. Computer makers "install Windows because that is what their customers want," he said.

Warden opened his case by urging the court to "view with considerable skepticism the crazy quilt of e-mail fragments that formed the core of the government's case."

On Monday, prosecutors contrasted more than a dozen e-mails with snippets of videotaped testimony by Microsoft's famous chairman, pointing out apparent contradictions. The government charged Microsoft first tried to split the Internet browser market with Netscape, and later to ruin Netscape by giving away Microsoft browser for free and by persuading other companies to shun Netscape's software.

On Tuesday, Warden dismissed Netscape as the government's "ward" and argued that Microsoft's browser, Internet Explorer, is an integral part of Windows that cannot be removed.

Warden said the case marked the "return of the Luddites," who feared technological innovation. He said Microsoft had clearly advanced browsing technology by putting it in the operating system. Netscape lost the browser war because innovation passed it by, he said.

Key witness

In written testimony released in advance of his courtroom appearance, Barksdale claimed Microsoft first proposed to split the market for Internet browsers in a June 1995 meeting, then tried to "crush" Netscape when that failed.

Barksdale is the star witness for the Justice Department, which along with 21 state attorneys general has charged Microsoft with using the market-dominating power of its Windows operating system to fight off the challenge from Netscape's Internet browsing software.

"Microsoft made it clear that if Netscape did not agree to its plan to divide the browser market, Microsoft would crush Netscape, using its operating system monopoly, by freely incorporating all of the functionality of Netscape's products into Windows," Barksdale said.

After the meeting with Netscape, Microsoft did incorporate browsing functions into Windows. Netscape's revenue from browser software dried up once Netscape began giving its browser away, as Microsoft had done.

Power play

"Microsoft set out to use its vast power as the producer of Windows to 'cut off Netscape's air supply' once Microsoft realized that browsers were a threat to its monopoly," Barksdale said in his written testimony.

"The current software marketplace is not a competitive marketplace," Barksdale said. He urged the court to order Microsoft to separate its "operating system efforts and personnel from those working on applications software."

The allegations about dividing up the browser market are at the core of the Justice Department's antitrust case against the Redmond, Wash., software giant. In opening arguments Monday, government lawyer David Boies said the evidence would show that Microsoft executives were preoccupied in early 1995 with the threat Netscape posed to Windows.

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